Final answer:
An expense paid in cash before it is used is called a prepaid expense, which is considered an asset in accounting as it offers future economic benefits.
Step-by-step explanation:
When an expense is paid in cash before it is used, it is called a prepaid expense. In accounting, prepaid expenses are considered assets because they provide future economic benefit to the business. This contrasts with expenses incurred for goods or services consumed within a short period, which are recorded as current expenses.
Prepaid expenses may include payments for rent, insurance, or supplies that will be used over time. Recording them as assets allows businesses to allocate the expense over the period it pertains to, ensuring accurate financial reporting.